Weaknesses of China seen during epidemic

By Wang Dan 王丹

Soon after severe acute respiratory syndrome (SARS) broke out in Hong Kong, Long Yongtu (龍永圖), the new secretary-general of the Boao Forum for Asia, accused the Hong Kong media of unduly sensationalizing the disease.

In his view, it was not a big deal for Hong Kong, with a population of 6 million, to have several hundred cases of infection. In his way of thinking, just think how many people in China, which has a population of 1.3 billion people, would need to get infected with the aypical pneumonia for China to get the same amount of media attention as Hong Kong.

The reality, of course, reflects Long's thinking. Following the initial revelations about the disease in November last year, it wasn't until February that the city of Guangzhou, under pressure because of rumors spread on the Internet and cellphone messages, coyly came out to "refute the rumors." Afterward, news reports of the epidemic disappeared until it finally got out of control.

Long's thinking reflects China's usual response to this type of problem. Because of the country's concern for stability, "sensitive issues" (the scope of which is limitless) are never allowed to be covered. This approach can bring problems.

First, it is now impossible to completely control the dissemination of information. This contagion is a perfect example. The Chinese authorities kept trying to cover it up, but paper cannot cover up fire, after all. The consequence was panic among the people. Fear is a lethal threat to stable economic development.

Second, a market economy is built on honesty and credibility. Credit cards depend on credibility. In China, how can a market economy develop successfully if credibility is destroyed from the government downwards? On the one hand, the Chinese authorities expect foreign investors to have faith in China's economic development. On the other hand, they tell lies and conceal information.

Third, society's future performance, particularly the effective operation of market mechanisms, will also be based on the circulation and transparency of information. If information cannot flow freely, market mechanisms themselves will be distorted. But we still see China concealing information in its efforts to control the epidemic.

Anyone with knowledge of economics knows that it is difficult to fix regular prices or prepare economic analyses accurately with distorted information or an information imbalance. In such circumstances, all investments are subject to a lot of unexpected risks.

Most businesspeople consider only the business aspects of their commercial pursuits. Consequently, when Taiwanese investors consider their investment risks in China, they rarely touch upon those problems related to China's political framework. As we can see from the epidemic, there is no doubt that they lack foresight in their thinking.

If the Chinese authorities had allowed objective news reporting and mobilized local forces to enforce quarantine and treatment when outbreak first came to light in Guangdong, today's panic and enormous economic losses would have been prevented. This is a typical case of totalitarianism threatening the market economy.

The epidemic will eventually pass. But it has shown China's slowness and inappropriateness of response are unlikely to be remedied without political reform, particularly mass-media reform. Otherwise, China can only take stopgap measures or treat the symptoms but not the disease. It would be odd for such a political and economic system not to encounter problems.